Digital fashion startup pioneers NFTs for virtual worlds
Things are moving fast in the metaverse. On the Inside.com webinar titled “Mastering NFTs” that I attended recently, we got some intriguing insights into how a crypto brand is pioneering virtual footwear in the metaverse and bridging the digital and physical worlds — courtesy of sneaker fashion.
The startup RTFKT, which launched in January 2020, just closed an $8 million investment round on the strength of its early traction as one of the first brands wading into the crypto realm. On the Inside webinar, RTFKT co-founder Benoit Pagotto explained the genesis of their new venture.
“We really started from the belief that a big revolution was coming,” Pagotto said. In deciding to launch a startup with two co-founder “sneaker-heads” he recalled, the trio was convinced that digital assets were becoming just as important to a new generation of consumers as their physical goods. “We started to think what could be cool is if we started to match some of the game skins and aesthetic we love in games with game items [attached to] sneakers” you own in a virtual world.
The trio decided to use NFTs as the vehicle to introduce their concept to the crypto community and to “create the brand of the future,” he said in a thick French accent. The three-person shop began designing some slick-looking virtual footwear in collaboration with an 18-year-old artist named FEWOCiOUS. In March, RTFKT released an NFT drop that generated $3.1 million in sales for the virtual sneakers — in all of seven minutes.
The sneakers sold and were resold more than 600 times, with the buyers having the option to turn the design into real shoes. RTFKT held a series of special events that allowed each buyer to unlock physical versions of their virtual goods, and shipments began going out in late July.
“What we’re always focused on is merging the real and virtual worlds, and right now it’s a really cool moment because the world is reopening and people are doing, conferences, meetings, getting drinks, etc.,” and they want to look cool in some eye-catching footwear.
Most of the sneakerwear, like the Atari design pictured above, can’t be turned into physical products (at least not yet). And that’s fine. The next generation of consumers are digital natives who grew up with gaming and are just as concerned with their virtual persona as they are with their outfits in the physical world.
Portable virtual assets in the metaverse
On Tuesday, avatar platform Ready Player Me announced it was partnering with “digital fashion house and metaverse fashion leader” RTFKT to bring bespoke digital collectible customization accessories to the metaverse. The platform will be offering items worth $100,000 to all Ready Player Me users for a limited period, free of charge.
Here’s why that’s important: portability.
The new custom avatar creation hub recently launched by Ready Player Me allows users to travel between video games, virtual reality experiences and other apps using a single virtual identity. The hub, available to all, and connects users to more than 300 apps and games currently integrated with the platform. Hot customization assets based on the RTFKT’s most sought-after items include the Meta Jacket, Cyber Sneakers, and Fewo Shoes.
As the brands’ joint announcement noted:
Ready Player Me’s latest partnership with RTFKT will enable the brand’s digital assets to become usable in the metaverse. Until now, these could be shown off by users who own them, but will now feature full utility, and will be able to travel with users’ avatars across hundreds of virtual worlds. With the arrival of portable avatars comes portable virtual assets, which are key to the success of bringing the metaverse to life. Ready Player Me’s network enables cross-game digital assets and economies to exist, which has not been possible until today.
With NFT marketplaces just getting going and virtual worlds and metaverses still relatively nascent, this pairing portends huge things ahead for startups that can help facilitate transactions between creators and collectors of digital assets, given the growing appetite for using digital assets in our digital lives.
The Germany-based English streetwear blog Highsnobiety, of all places, offered this spot-on analysis:
The potential for sneakers in the NFT market is massive. In one sense, sneakers are a perfect analog for how NFTs function, as both sneakers and NFTs derive their value from exclusivity and a largely invented idea of value. Although NFTs are not fungible, users are still able to interact with the sneakers in a few ways, like trying them on in apps or wearing them around in games such as Decentraland and The Sandbox. With further adoption of AR and VR technology, crypto fashion, and sneakers, in particular, will become a popular way for the masses to interact with NFTs. Aside from just sneakers, RTFKT has also auctioned off charms and jackets, all of which are also wearable in the digital realm.
The digital sneaker space has been building up for some time. In 2019, Nike patented the tokenization of real-life shoe purchases, a token they called Cryptokicks, while last year saw the launch of Aglet, an app that lets users buy digital shoes that wear out over time as if you were really wearing them. Putting NFTs and crypto aside, new trading platforms like Rally and Otis have given sneaker investors another way to spend their money on shoes, exclusively digitally, by offering shares in sneakers, as if the sneaker were a company.
Pagotto once described his company as “a fashion company born from gaming,” and that’s likely to be a path that other NFT ventures can explore in other verticals. His co-founder Steven Vasilev told Fashion United, “In the future, we will see NFTs as keys or passports for experiences, games or virtual events.”
Upon announcing its lead funding for RTFKT’s round, Jonathan Lai, partner at Andreessen Horowitz, tweeted on May 4: “RTFKT aspires to build the first digital-first fashion label. As we spend more time in virtual worlds, we will care just as much about our digital sneakers / handbags as we do our physical ones.”
With the infusion of capital, RTFKT Studios plans to scale its team of three by hiring creators and artists, build an NFT marketplace and hire programmers to build a new virtual world.